REG-BlackRock World Mng: Portfolio Update
25/09/2019 10:10
BLACKROCK WORLD MINING TRUST plc (LEI - LNFFPBEUZJBOSR6PW155)
All information is at 31 August 2019 and unaudited.
Performance at month end with net income reinvested
One Three One Three Five
Month Months Year Years Years
Net asset value -5.6% 8.3% 8.9% 46.3% 10.4%
Share price -7.6% 6.9% 4.5% 44.4% 0.3%
EMIX Global Mining Index (Net)* -3.8% 8.2% 19.2% 53.3% 28.9%
(Total return)
Sources: BlackRock, EMIX Global Mining Index, Datastream
At month end
Net asset value including income (1): 419.12p
Net asset value capital only: 411.15p
(1)Includes net revenue of 6.02p
Share price: 353.00p
Discount to NAV (2): 15.8%
Total assets: £857.4m
Net yield (3): 5.7%
Net gearing: 13.9%
Ordinary shares in issue: 176,296,476
Ordinary shares held in treasury: 16,715,366
Ongoing charges (4): 0.9%
(2)Discount to NAV including income. (3)Based on quarterly interim dividends of 4.00p per share declared on 20 August 2019 and 2 May 2019 in respect of the year ending 31 December 2019 and a quarterly interim dividend of 3.00p per share declared on 8 November 2018 and a final dividend of 9.00p per share announced on 28 February 2019 in respect of the year ended 31 December 2018. (4)Calculated as a percentage of average net assets and using expenses, excluding finance costs, for the year ended 31 December 2018.
Sector % Total Country Analysis % Total
Assets Assets
Diversified 37.6 Global 63.0
Gold 26.2 Australasia 10.6
Copper 18.0 Latin America 10.4
Silver & Diamonds 7.4 Canada 7.9
Industrial Minerals 5.5 Other Africa 1.9
Coal 1.2 South Africa 1.2
Nickel 0.9 USA 0.9
Materials 0.9 Indonesia 0.9
Zinc 0.2 Russia 0.7
Aluminium 0.1 Kazakhstan 0.6
Iron Ore 0.1 Argentina 0.1
Current assets 1.9 United Kingdom -0.1
Current assets 1.9
----- -----
100.0 100.0
===== =====
Ten Largest Investments
Company % Total
Assets
BHP 9.6
Rio Tinto 8.5
Vale:
Equity 4.7
Debenture 3.3
Barrick Gold 5.8
Newmont Mining 4.6
Agnico Eagle Mines 4.1
Wheaton Precious Metals 3.9
Oz Minerals Brazil:
Royalty 2.3
Equity 1.6
First Quantum Minerals 3.8
Anglo American 3.8
Commenting on the markets, Evy Hambro and Olivia Markham, representing the Investment Manager noted:
Performance
The Company’s NAV fell by 5.6% in August, underperforming its reference index, the EMIX Global Mining Index (net return), which declined by 3.8%.
The mining sector fell in August on the back of a deteriorating global economic growth outlook and declining commodity prices. Investors focused on the inversion of the yield curve, as the 10-year yield fell below that of the 2-year for the first time since 2007, a warning sign for a potential impending recession. Meanwhile, the US Federal Reserve dampened expectations around further rate cuts and US-China trade tensions escalated, adding to concerns around growth. US President Donald Trump announced tariff
hikes on effectively all Chinese imports to the US and Beijing announced retaliatory tariffs towards the end of the month. Broader equity markets were relatively weak amidst this backdrop, with the MSCI World TR Index falling 2.1%.
Within the mined commodities, the bulk commodities were the worst performing, with iron ore (62% fe) and coking coal prices falling 28.9% and 10.8% respectively. Having performed very well year-to-date, the iron ore price dropped to $86/tonne by the end of August on lower restocking at Chinese steel mills and as Brazilian exports began to normalize after outages following the Brumadinho tailings dam tragedy earlier this year. Elsewhere, the base metals were also weak, with aluminium, copper and zinc prices
down 2.7%, 4.2% and 9.4% respectively on deteriorating global growth concerns. Nickel bucked the trend, with its price rising 24.6% after Indonesia announced plans to introduce an export ban in 2020. Meanwhile, precious metals were strong, with gold and silver prices up 7.1% and 12.1% respectively. Gold benefited from real rates continuing to decline and increased ‘safe-haven’ demand amid broader equity market weakness.
Strategy and Outlook
We see an attractive valuation opportunity in mining today. The mining sector is generating close to record free cash flow, whilst balance sheets are in strong shape and companies remain focused on capital discipline. Whilst US-China trade tensions are fuelling uncertainty, our base case remains that we have positive global economic growth for the next 12-18 months, albeit at a slower rate than was expected this time last year. Barring an economic recession, we expect the mining sector to re-rate as the
miners continue to generate robust free cash flow and return capital to shareholders through dividends and buybacks. We expect most mined commodity prices to be stable to rising through the remainder of this year. On the commodity demand side, we do not anticipate a hard-landing type event in China and we have been encouraged by stimulus measures beginning to feed through into improvements in some economic data points. On the commodity supply side, supply is tight in most mined commodity markets and, given
the cuts in mining sector spending since 2012 (down ~66%), we expect it to remain so.
All data points are in GBP terms unless stated otherwise.
25 September 2019
Latest information is available by typing www.blackrock.co.uk/brwm on the internet. Neither the contents of the Manager’s website nor the contents of any website accessible from hyperlinks on the Manager’s website (or any other website) is incorporated into, or forms part of, this announcement.
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